Highlights

• EU-China summit focuses on rare earth export controls and supply chain disruptions affecting defense and automotive industries.
• Diplomatic tensions escalate over trade disputes, including EV tariffs and potential leverage of critical minerals access.
• Geopolitical dynamics shift as China uses rare earth policy as a strategic negotiation tool in global trade relationships.

A high-stakes EU-China summit in Beijing today arrives with little optimism, as Europe’s top leaders press Chinese officials on two critical fronts: rare earth supply disruptions and China's continued support for Russia. According to reporting by Laurie Chen for Reuters and republished in the Taipei Times, the summit—initially scheduled for two days—was shortened to one amid strained relations and low expectations for substantive progress.

European Commission President Ursula von der Leyen and European Council President Antonio Costa are expected to demand clarity on Chinese rare earth export controls, which have increasingly disrupted European defense and automotive supply chains. Although Beijing’s restrictions were primarily aimed at Washington, the knock-on effects in Europe have been significant—highlighting just how central China remains to the global critical minerals ecosystem.

The rare earth issue, while urgent, is just one of many unresolved disputes. The EU and China are also locked in escalating tariff spats over Chinese-made EVs, retaliatory duties on French cognac, and new medical device procurement rules. China, for its part, is pushing for the EU to finalize a long-stalled investment agreement and ease sanctions on key Chinese firms tied to the Ukraine conflict.

Meanwhile, European officials suspect that China is using its access to rare earths as leverage in these negotiations. Chinese sources reportedly raised rare earth policy alongside demands related to U.S.export restrictions on Dutch chipmaking giant ASML.

Key Questions for Investors

• Will Europe accelerate diversification of its rare earth supply chains in response—or simply cave to Beijing’s demands? How well is Europe’s nascent rare earth industrial policy evolving?
• Could rare earths become a permanent geopolitical bargaining chip in global trade wars?
• Will the EU’s push for a “balanced, reciprocal” trade relationship lead to concrete policy changes—or more diplomatic stalemates?

As China’s trade with the U.S. plummets, Europe risks becoming the new front line in Beijing’s strategic resource diplomacy. Investors should watch rare earth producers outside China, especially in the EU, U.S., and Africa, as geopolitical risk premiums rise.

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By Laurie Chen, Reuters (via Taipei Times)